While the meltdown of the housing market originally benefited the multifamily sector — as more homeowners transitioned to renters — the current recession and its rising unemployment has started to affect activity. “Right now, it is all about the economy,” says Kevin Wolfgang, president of New Castle-based Evergreen Realty and recently elected president of the Delaware Apartment Association. “Our industry is directly affected by the job market, so the increased amount of unemployment has created significant operation challenges.” Multifamily owners in Delaware are weathering the storm by focusing on the operation of the properties — trying to find ways to make them as efficient as possible. This has slowed down sales considerably. Owners who are still receiving a steady cash flow are seeing no reason to sell for less money. “Most investors are very cautious right now,” Wolfgang says. “No one is chasing deals, and there is nothing that I have seen as having a major impact on the market right now.” Evergreen Realty’s main activity has been its purchase and upcoming redevelopment of Hampston Walk Apartments, a 370-unit community located in New Castle. The company purchased the blighted property in mid-2008 and is repositioning it with renovations to unit …
Delaware
Despite being just south of Philadelphia, Delaware continues to maintain its presence in the New England market and its own identity. After a very active period from 2005 to 2007, office development in Wilmington’s central business district (CBD) is now taking a breather. The last project finished, the Renaissance Center at 4th and King streets, still has significant vacancies. The suburban market has also slowed, and new developers are taking a wait-and-see approach before speculatively breaking ground on new projects. This current slowdown in market activity is attributable partly to the market and partly to the usual summer slump. The slowdown has brought overall vacancy rates to 17.1 percent for Class A and B office product, including sublease space. The Wilmington CBD comes in with the highest rate at 20.5 percent (Class A and B, including subleases), while western New Castle County posts a rate of 6.2 percent, an anomaly compared to the other submarkets that lean more towards the CBD’s rate. Currently, rents for Class A space in the CBD can run from the low $20s to low $30s per square foot. Suburban rents for Class A space are equivalent, ranging from the low to high $20s. Leasing may …
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